Wednesday, March 30, 2016

Berkshire Hathaway 2016 Shareholder Letter

So Sad to read this, but it's reality"There is, however, one clear, present and enduring danger to Berkshire against which Charlie and I are
powerless. That threat to Berkshire is also the major threat our citizenry faces: a “successful” (as defined by the
aggressor) cyber, biological, nuclear or chemical attack on the United States. That is a risk Berkshire shares with all
of American business.

The probability of such mass destruction in any given year is likely very small. It’s been more than 70
years since I delivered a Washington Post newspaper headlining the fact that the United States had dropped the first
atomic bomb. Subsequently, we’ve had a few close calls but avoided catastrophic destruction. We can thank our
government – and luck! – for this result.
Nevertheless, what’s a small probability in a short period approaches certainty in the longer run. (If there is
only one chance in thirty of an event occurring in a given year, the likelihood of it occurring at least once in a
century is 96.6%.) The added bad news is that there will forever be people and organizations and perhaps even
nations that would like to inflict maximum damage on our country. Their means of doing so have increased
exponentially during my lifetime. “Innovation” has its dark side.
There is no way for American corporations or their investors to shed this risk. If an event occurs in the U.S.
that leads to mass devastation, the value of all equity investments will almost certainly be decimated.
No one knows what “the day after” will look like. I think, however, that Einstein’s 1949 appraisal remains
apt: “I know not with what weapons World War III will be fought, but World War IV will be fought with sticks and
stones.”